Hong Kong - Future trends



Hong Kong has a very strong economic base, which has enabled it to tolerate periods of economic hardship. Its economic strength helped it survive the severe financial crisis of the late 1990s with minor damage, compared to the extensive devastation of many Asian economies. This strong economic base will help Hong Kong to regain its losses and expand its economy to play a more significant role in global markets. Hong Kong's access to China will make a large contribution to the expansion of its economy and will elevate its international status. The migration of the manufacturing industry to mainland China has weakened the local industrial base and created unemployment, but it has also opened a very promising economic opportunity for Hong Kong. China's abundance of land and raw materials and its low cost of labor have addressed the major limitations of the Hong Kong manufacturing sector. These limitations have prevented it from growing in light and consumer industries and from establishing labor-and land-intensive industries, including heavy industry. Mainland China has thus offered to Hong Kong an opportunity for industrial growth and expansion of exports of manufactures. It has also offered its huge 1.3-billion strong market, the world's largest, for investment and exports. This has put the Hong Kong economy well ahead of many other developed economies, which have been trying to gain extensive access to China. Hong Kong's manufacturing will surely expand, and its role in its economy will become more prominent, but the service sector will remain the largest and most dominant sector and the engine of growth. This is partly because of the strength and the phenomenal size of that sector, which have enabled it to grow and will ensure its continuity. It is also partly because of its crucial role in the re-export of goods produced in China, including their packaging, shipping, handling, and marketing, as well as financing their production.

Hong Kong's high-tech and IT industries have a great potential for growth. The territory's private sector has taken steps towards that end while its government has encouraged private initiatives. The high-tech and IT industries should have a stronger presence in international markets over the next few years, even though they face a challenge from the more developed industries of Taiwan, Singapore, and South Korea.

The service industry has absorbed most of the unemployed workers of the manufacturing sectors, but it has been unable to find jobs for a growing number of them. Given the continued migration of manufacturing industries to mainland China, the number of these unskilled or low-skilled middle-aged unemployed workers will continue to grow. Unless the Hong Kong government or the service sector retrains them to find jobs in emergent industries, most of them will become permanently unemployed. Their frustration will likely contribute to social and political disorder in Hong Kong, which has not experienced such phenomena in its contemporary history.

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